An economic consulting firm says the city and state risk taxing constituents’ patience if they do not clarify how the localities will handle recent federal levy changes.
Anderson Economic Group sent letters last week to state and city officials asking them to confirm that they would continue to allow residents to deduct $1,000 for each dependent they support from their taxable state and local incomes, despite the federal government nixing the exemption.
Jason Horwitz, director of public policy and economic analysis at Anderson, said he believes New Yorkers should be able to continue claiming the exemption on state and local filings. He said the city and state paperwork permits people to claim the same number of dependents as the federal government allows. The federal government did not abolish the exemption, but set its allowable deduction to $0.
Even if the governments disagree, Horwitz said the city and state should promptly clarify how they interpret the matter.
“They need to come out and say publicly, ‘We think that this will result in their exemptions going away,’ if they think that’s true. And that way legislators can respond and say, ‘Well do we actually want that to happen or should we go and change the law?’” Horwitz said. “If they don’t do that, then my fear would be there’s just going to be a lot of confusion when people need to do their taxes next year about whether or not they get these exemptions; there might be lawsuits.”
Horwitz said if the governments treat the exemption as moot, city taxpayers would collectively have to pay about $50 million more in income taxes in 2018.
The state Department of Taxation and Finance did not respond to requests for comment.
A spokeswoman for Mayor Bill de Blasio wrote in an email, “We are reviewing the new tax law and its consequences on New Yorkers and are evaluating what actions we need to take.”